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                Insurance News &amp; Guides</div>
            <div class="sub-heading">
                Comparison sites starting to make waves in Asia</div>
            <div class="body-text">
                Source: Insurance Insight<br />
                Author: Nicky Burridge<br />
                Date: 14/02/2012<br />
                URL: http://www.insuranceinsight.eu/insurance-insight/feature/2152396/comparrison-sites-starting-waves-asia<br />
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                    <img src="/images/insurance-insight.png" width="300" height="125" alt="" /></div>
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                    Price comparison websites are a significant part of the financial landscape in the
                    UK. Nicky Burridge asks whether Asia will look the same in the future.</div>
                <div class="body-text">
                    <p>
                        Price comparison websites have become such a significant part of the financial landscape
                        in the UK, it is hard to imagine buying insurance without them. But in China and
                        South East Asia the concept is still very much in its infancy. The first aggregator
                        site in the region was only set up in October 2010, when <a href="http://www.comparexpress.com"
                            target="_blank" style="text-decoration: none; color: #3899EC;">Comparexpress.com</a>
                        launched in Singapore.</p>
                    <p>
                        The website, which offers motor, personal accident and travel cover, started with
                        just three insurers, but has since expanded to cover 11 brands, including an insurance
                        agency.</p>
                    <p>
                        The group launched a second website in Thailand, branded <a href="/en/" style="text-decoration: none;
                            color: #3899EC;">GluayGluay.com</a>, in October last year, and has plans to
                        roll out aggregator sites in China, Hong Kong, Malaysia, Indonesia and the Philippines</p>
                    <p>
                        Meanwhile, Baowang (www.baoxian.com) is blazing the trail for price comparison websites
                        in China.</p>
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                <div class="sub-heading">
                    CNinsure roll out</div>
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                    <p>
                        Backed by Nasdaq-listed insurance intermediary CNinsure, the site opened to business
                        at the start of this year.</p>
                    <p>
                        Like <b>Comparexpress</b>, Baowang enables consumers to not only compare prices
                        and policy features, but submit online applications and payments - an entirely new
                        proposition in the Chinese market</p>
                    <p>
                        The launch came after the China Insurance Regulatory Commission published a legal
                        framework setting out rules for insurance intermediaries to carry out business online.
                        It is early days, but Chunlin Wang, chief executive of CNinsure, is bullish about
                        the site's prospects.</p>
                    <p>
                        He says: "With a favorable regulatory environment and being on the leading edge
                        of the trend, we are optimistic about the development of our e-commerce insurance
                        business."</p>
                    <p>
                        However, some industry commentators are more sceptical that the price comparison
                        model will work in China and neighbouring markets, such as Hong Kong.</p>
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                <div class="sub-heading">
                    Savvy customers key to success</div>
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                    <p>
                        The success of aggregator websites ultimately rests on a combination of savvy consumers,
                        who are willing to shop around to get the best deal, and a highly competitive industry,
                        in which insurers are prepared to undercut their rivals in order to grow market
                        share. But both of these factors are largely absent in China.</p>
                    <p>
                        The general insurance landscape is dominated by three major players: the People's
                        Insurance Company of China, Ping An and China Pacific, which between them account
                        for around 67% of products sold.</p>
                    <p>
                        The rest of the market is highly fragmented and consists of smaller insurers, many
                        of which operate in limited regional areas, and foreign insurers, which make up
                        just 1.1% of the market.</p>
                    <p>
                        But there is a more significant obstacle to the success of the sites. Sam Evans,
                        partner at KPMG China, explains:</p>
                    <p>
                        "Following expected pricing reform, though, insurers will have greater flexibility
                        to vary the premiums through things like no claims discounts and other methods.
                        Success comes through scale, rather than price and product features."</p>
                    <p>
                        China also appears to lack the sophisticated, price-sensitive consumers that aggregator
                        sites rely on.</p>
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                <div class="sub-heading">
                    Traditional models rule</div>
                <div class="body-text">
                    <p>
                        Evans says: "The distribution models are still very traditional here. The primary
                        way most people buy insurance is through an agent and increasingly through banks.
                        Direct sales are still very rare.</p>
                    <p>
                        "The only product in China that has any traction at all in terms of telesales is
                        motor insurance, and that is really coming from only one company, Ping An."</p>
                    <p>
                        Research suggests that many Chinese consumers lack the confidence to pick their
                        own products, but they trust an agent to understand their needs and make recommendations
                        based on their individual circumstances.</p>
                    <p>
                        The bancassurance channel is also popular because consumers trust the bank brand,
                        while they like the physical presence of branches. Meanwhile, the cost of cover
                        is relatively low down the list of factors that influence Chinese consumers' purchasing
                        decisions.</p>
                    <p>
                        Research carried out by KPMG among 1220 people in China found that the single most
                        important factor that influenced consumers when buying insurance was a previous
                        positive experience of a company. Next on the list was receiving personalised advice,
                        followed by being given a recommendation by a relative, with the cost of a product
                        coming a lowly fourth.</p>
                </div>
                <div class="sub-heading">
                    Building relationships</div>
                <div class="body-text">
                    <p>
                        Many agents also work hard to maintain long-term relationships with families. For
                        example, in China's economic powerhouse province of Guangdong, some agents have
                        set up sidelines helping Chinese women desperate for a second child to give birth
                        in neighbouring Hong Kong, thus circumventing the country's one-child policy. They
                        then use the relationship they establish to sell insurance products to the family
                        for years to come.</p>
                    <p>
                        The type of policies that work well on price comparison websites also have relatively
                        low market penetration in China.</p>
                    <p>
                        Only 38% of the consumers questioned by KPMG had motor insurance, just 24% had a
                        short-term travel insurance policy and only 18% had property cover. These rates
                        compare with 66% of people who had accident insurance and 55% who had critical illness
                        cover.</p>
                    <p>
                        And even if consumers become more price sensitive and shop around for products,
                        it is still likely to be a big leap for them to take out cover online.</p>
                    <p>
                        Hong Kong insurance agency Now Insurance set up a website in 2002 and is now one
                        of the top 10 agencies that provides insurance online in the city. But group spokesman
                        Terence Tse says: "The online service is mostly for information only. Most people
                        like to talk to someone personally, rather than take out insurance online.</p>
                    <p>
                        He adds that across the market in Hong Kong around 99% of motor insurance is still
                        sold offline. But insurers are not blind to the potential cost savings of doing
                        more business online, and this is likely to prove a powerful motivator in trying
                        to migrate customers towards this channel.</p>
                    <p>
                        Some groups, such as Dah Sing Insurance and HSBC, are offering discounts of up to
                        20% to consumers in Hong Kong who take out policies online, but many others still
                        only offer paper applications.</p>
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                <div class="sub-heading">
                    Other aggregators in the pipeline</div>
                <div class="body-text">
                    <p>
                        Meanwhile, there are signs that more aggregator sites could appear in the near future.
                        A price comparison site for life insurance is rumoured to be due to begin a pilot
                        in Shanghai shortly, while insurer Ace, which lists on Comparexpress, says it has
                        received several approaches regarding websites in Hong Kong, although so far, nothing
                        has materialised.</p>
                    <p>
                        The group adds that it believes the success of the aggregator model will be heavily
                        dependent on the growth in online direct purchasing. Shu-Yen Liu, actuarial practice
                        leader for Asia at PwC, thinks there might be scope for internet sales for motor
                        insurance.</p>
                    <p>
                        But he adds: "I don't see price comparison happening for other products as consumer
                        purchasing behaviour is key."</p>
                    <p>
                        Either way, there is clearly a long way to go before the sites become the popular
                        consumer tools that they now are in the UK.</p>
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